The Treaty establishing Energy Community centers at the creation of an integrated market "based on common interest and solidarity". Regional market not only necessitates common legal framework, but affirmative action from all Contracting Parties. A single regulatory space for trade must prevail. A stable regulatory and market framework is prerequisite for attracting investments in generation and transmission networks. The application of harmonized technical standards is another precondition for a functioning regional market.
A hallmark for truly internal market is the magnitude of cross-border trade. Trade is mutually beneficial, when resource endowments differ across the counterparts. Further arguments in favour of trading relate to a small national market size and cost differences in power generation. Cross-border trade can also have a positive impact on security of supply. The power supply reliability targets can be achieved with a lower capacity reserve margin when networks are interconnected as opposed to operating independently.
In 2004 trade in electricity amounted to roughly 10 per cent of final demand in South East Europe. Insufficient transmission interconnection capacity with neighboring systems is the main course for limited trading. The great number of borders in combination with opposing transmission capacity auction mechanisms makes trading in the region a difficult undertaking.
CONTENT
As next, the steps towards the creation of a regional electricity market will be highlighted. Firstly, the internal electricity market principles of the Regulation (EC) 1228/2003 and the concept of the 8th region will be described. In response, the work on the most suitable mechanism of transmission capacity allocation in South East Europe will be outlined. Here the focus is put on two concrete projects, on Dry run CA SEE and its follow up project SEE Coordinated Auction Office.
